What is legacy in accounts
Answers
Answer:
A legacy is a phrase used in finance to describe the process of leaving assets, such as stocks, shares, jewelry, and cash, to organizations and people in accordance with the terms of a will or estate plan.
Explanation:
In accordance with a deceased person's bequest, a legacy is a sum received by the nonprofit organization. It is regarded as a capital receipt because it has a one-time nature. The principal source of funding for an NPO cannot, therefore, be considered a legacy. A legacy in the context of accountancy is cash collected from the liabilities of a non-profit. These funds are not considered income to the organization; instead, they are treated as receipts. The capital fund may be credited with acquired legacies that are not intended for a particular fund or general.
As a result, it will be listed as an asset rather than a receipt or payment on the balance sheet. Legacy should be recorded as a capital receipt because it was acquired for an established purpose. Both the capital fund and the balance sheet must take this into account.